A trader works on the floor of the New York Stock Exchange.
NYSE
The S&P 500 was flat on Friday as the stock market’s incredible comeback from Monday’s violent rout faltered a tad. The benchmark was close to wiping out its losses for the week.
The S&P 500 traded around 0.1% higher and was down just 0.4% for the week. The Nasdaq Composite slipped 0.1%, while the Dow Jones Industrial Average hovered near the flatline.
This week marked the most volatile week of 2024 for the market. The Dow on Monday tumbled 1,000 points, while the S&P 500 lost 3% for its worst day since 2022. Disappointing U.S. payrolls data from the prior week and concerns the Federal Reserve was too late with rate cuts were the main culprits for the selling, along with the unwinding of a popular currency trade by hedge funds.
S&P 500, 5-days
However, the major averages mounted a comeback, with Thursday’s encouraging weekly jobless claims number helping alleviate investors’ concerns about the U.S. economy. The S&P 500 advanced 2.3% on Thursday for its best day since November 2022, while the 30-stock Dow surged roughly 683 points. The tech-heavy Nasdaq Composite added nearly 2.9%.
Now the major averages are threatening to turn higher for the week. The Dow is down just 0.7% for the week and the Nasdaq is off by just 0.6%.
At the Monday lows, the S&P 500 was down nearly 10% from its recent all-time high. The Nasdaq Composite’s pullback reached full-fledged correction territory of beyond 10%. The Cboe Volatility Index — used by Wall Street to measure fear — reached heights last seen during the onset of the pandemic and the Great Financial Crisis.
But investors stepped into buy the dip on the notion another crisis or recession was not on the horizon and the week’s earlier losses were tied more to hedge funds unwinding a long-time bet on a cheap Japanese yen than anything bigger.
It’s not just equity markets that have had a volatile week. The 10-year Treasury yield fell below 3.70% at one point, only to retake 4% on Thursday. It was last trading around 3.93%.
Stocks like megacap tech leader Meta and weight-loss drug darling Eli Lilly have led the comeback from the lows. Meta was up 5% on Friday, while Eli Lilly surged 11%.
“The recent risk-off move in markets has reflected some concern over whether the Fed has put the US economy in peril by delaying rate cuts for too long,” said Solita Marcelli, UBS Global Wealth Management chief investment officer Americas, in a note. “But moves have also been exacerbated by technical factors, including the unwinding of yen carry trades and overextended positioning.”
“We believe investors shouldn’t overreact to swings in market sentiment,” added Marcelli, who sees the S&P 500 rebounding by year-end to 5,900.
